Market momentum remains volatile
Even players were expecting a 50 basis point rate cut.
The market ended lower on Thursday after remaining volatile for most part of the session as selling emerged after RBI policy was announced. The market players were disappointed as they were expecting a more dovish tone from the central Bank's monetary policy committee.
Even players were expecting a 50 basis point rate cut.
The Sensex ended 192 points lower at 38,684, while the Nifty settled at 11,598, down 45 points. Heavy selling was seen in IT and banking stocks. Major losers in IT pack were TCS, HCL Tech, Wipro and Infosys.
According to analysts, the market had priced in a 25 basis points but was expecting a change in RBI neutral stance, disappointing the Street. Banking stocks came under pressure, with Yes Bank, RBL Bank and IndusInd Bank and ICICI Bank among the top losers.
Market View
"The market consolidated as the outcome from RBI monetary policy was in-line with expectation with a 25bps cut in rate. Investors turned cautious about the downward revision in GDP growth to 7.2 per cent for FY20 while premium valuation and concerns over monsoon further impacted the sentiment. However, dovish view by global central banks and a likely better results in Q4FY19 can stabilize the market in the near-future," Vinod Nair, Head of Research, Geojit Financial Services Ltd
Bond yields spiked and the rupee fell after five members of the MPC of the RBI favored maintaining the stance as neutral while with one member voted for change in the stance to accommodative.
According to analysts, Thursday's decline was just a natural extension of Wednesday's profit booking as many stocks had entered an extremely overbought territory.
However, this doesn't change the trend. Many see it as a healthy correction to see sustainable rally in the near term.
Technical View
"We advise traders not to look for shorting opportunities, rather use dips to buy into some quality propositions. As far as levels are concerned, we see strong support zone in the vicinity of 11550 - 11500 and we expect buying to emerge once Index enters this zone. On the higher side, 11630 followed by 11663 would be seen as immediate hurdles. A sustainable move above this would push the index back to its all-time highs, which we expect to be surpassed soon, said Sameet Chavan Chief Analyst-Technical and Derivatives, Angel Broking.